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Time for road tolls countrywide? University of Calgary expert says, yes

Vehicles aproach the M6 motorway toll booths on March 13, 2005 in Birmingham, England. A University of Calgary report is calling on the government to set up tolls and user fees for roads, bridges and ferries across the country. (Scott Barbour/Getty Images)

A new report released Wednesday morning is urging governments at all levels to start charging Canadians user fees to pay for infrastructure upgrades and renewal. The controversial concept from a group of academics at contained in a report commissioned by the University of Calgary’s school of public policy is effectively advocating for a pay-as-you-go system to pay for renovations to infrastructure such as roads, bridges, ferries and rail.

What isn’t clear from the report is whether these tolls would replace tax dollars already directed at infrastructure work, such as road repair and replacement, or whether user fees should be charged on top of taxes. Either way, it’s not likely to be a concept that sits well with all Canadians even though it has been debated before.

Currently, tax dollars or some user fees cover the costs of replacing or repairing local, provincial and nationally-controlled infrastructure, but the backlog of repairs is so vast — estimated to be in the billions of dollars — that taxes alone may not be enough to pay for it all. Convincing Canadians to start paying user fees will be a “phenomenally difficult political economic exercise,” Brian Flemming, a transportation expert from commissioned to do the report for the university’s school of public policy, writes in the report released Wednesday morning. A successful pitch, he said, will require governments to be open and transparent with their plans — a tall task for what Flemming describes as “the most secretive and controlling government in Canadian history.”

Traffic is backed up on Notre dame and Peel close to the closed entrance to the Ville Marie tunnel in Montreal Thursday May 31, 2012. (Phil Carpenter/ The Gazette)

The need to charge user fees is being driven by the retreat of the federal government from stimulus spending as Ottawa attempts to get its fiscal house in order and cut the federal deficit over the coming three years. Flemming argues user fees, and an even more controversial concept — public-private partnerships including allowing people to invest their pensions in infrastructure projects through “infrastructure banks” — are one way to fill the financial gap left by the end of stimulus spending. The “infrastructure banks,” or “iBanks,” as the report calls them, would issue “infrastructure securities” such as bonds, preference shares or mortgage-backed securities as investment vehicles.

A second driver is climate change. Although the report questions the exact cause of climate change, Flemming argues more green technologies in vehicles that decrease the need for oil will, eventually, dry up the one line of infrastructure financing the federal government provides to cities: the gas tax. (Although that won’t happen anytime soon — one recent study from the Macdonald-Laurier Institute found Canadians can’t get enough of their cars.)

“The shrinking of the gas tax base is being recognized everywhere, even by states and the federal government in the United States,” Flemming writes. “That decline is already pushing people in other parts of the world towards other revenue sources, such as road pricing, more sophisticated tolling or congestion charging.”

“Only some form of road pricing will fill the coming shortfall in funding,” Flemming said. “This means something far beyond mere traditional tolling of roads and bridges. It means creating a system whereby those who use infrastructure will electronically have to pay small and sophisticated fees or this use.”

Canada is crumbling from the inside. More than half of the roads owned by cities across Canada need major repairs, and nearly one-quarter of waste water systems require billions of dollars worth of upgrades, according to a new report card released Tuesday.